How to Start a Business in Texas (Part 3)

Once the entrepreneur has decided what type of entity best suits the business’s needs, steps must be taken to form that type of entity. The steps can vary from state to state, but the steps are generally similar.

  • For a Sole Proprietorship or General Partnership (GP or Partnership):
    • The appropriate paperwork must be filed with the Internal Revenue Service for tax purposes. For example, a prudent entrepreneur would file for a FEIN (Federal Employment Identification Number — similar to a social security number for a business).
    • Local permits may be needed for the business’s specific services (or even perhaps for the property of the business).
    • If the entity is a partnership, then the partners will likely need a written partnership contract that dictates the agreed terms between the partners.
  • For a Limited Partnerships (LP), a Limited Liability Company (LLC), or a Corporation (Inc. or Corp.):
    • A Certificate of Formation needs to be filed with the Texas Secretary of State.
    • A LLC can (and should) also apply for a FEIN for tax purposes.
    • Local permits may be needed for the business’s specific services (or even perhaps for the property of the business).

Once the paperwork is processed and approved, you have your business entity!

Stay tuned for the next installment in our series on How to Form a Business in Texas.

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